State sees job gains after 30-month skid

Year-over-year increase is small but may signal start of fragile recovery

by Betty Beard - Oct. 22, 2010 12:00 AMThe Arizona Republic

The Arizona Department of Commerce reported Thursday that the state has added jobs for the past two months compared with a year earlier, offering hope that with some employers hiring and expanding, and others curtailing layoffs, the state's fragile economy might gain some traction.

The growth is small - or, as department economists described it, just a "tender shoot."

Arizona had 0.5 percent more jobs in September than in September 2009. September's job growth in the Valley was even stronger, with a 0.9 percent rise. Economists also revised Arizona's August job figures to a gain of 0.3 percent from a previously reported 0.1 percent loss.

Although the increases are tiny, they are still welcome. The two months of positive numbers followed a dreary 30 consecutive months of year-over-year job losses.

The turnaround is a sign of improvement that economists hope will translate into more consumer and business confidence and more spending and hiring to speed up the recovery.

"We have clearly ended the recession, and things are better and will eventually become much better," said economist Tom Rex of Arizona State University.

Rex, however, cautioned that the state still faces rough waters because commercial real- estate construction is virtually non-existent and residential foreclosures continue at a grim pace.

The unemployment rate remained at 9.7 percent in September, equaling August's rate and remaining the highest it has been in 27 years. The jobless rate is expected to stay high for months, as it typically does early in a recovery.

The rate is based on a nationwide federal survey that asks people if they applied for work in the previous month. As more jobs are created and an economy begins to grow, previously discouraged job seekers typically re-enter the job market.

Almost one-fifth of working-age Arizonans are believed to be unemployed, working less than full time or discouraged.

Marshall Vest, a University of Arizona economist, expects Arizona will see job growth of 2 to 3 percent within a few months, compared with the previous year.

Beckie Holmes, an economist with Cox Communications, said initial claims for unemployment insurance have been falling in Arizona since July, another indication that job losses have been subsiding.

New claims totaled 23,569 in September, almost returning to their low point of the year, 23,411 in February, according to the U.S. Department of Labor.

Whiff of optimism

Consumers are starting to sense improvement, too, according to the latest Consumer Confidence Index compiled by Behavior Research Center Inc. After its latest survey, taken of 800 adults in early October, the Phoenix-based research company boosted the index to a yearly high of 56.3, compared with 49 in July.

One of the stronger findings was that 62 percent of those surveyed believed their employers were growing. That included 36 percent who called that growth "strong."

Michael Jordan, a Phoenix resident interviewed at a downtown restaurant, said he feels better about the local economy than he did a year ago.

"I've been watching the market go up and seeing a lot more development in the area, particularly downtown (Phoenix)," he said. "There's a lot less talk about people not being able to find jobs."

Jessica Cooney, 30, also of Phoenix, said all the recent talk about economic doom and gloom doesn't jibe with her own experience.

"You hear all sorts of terrible things, but it really hasn't affected me," she said. "In the last year, I bought a house and paid off my car."

In addition, she recently found a new job at a telemarketing firm in downtown Phoenix.

Full recovery far off

It could take years for the state to recover from its recent massive job losses. The Commerce Department estimates that Arizona has lost about almost 310,000 jobs since the recession officially began in December 2007. Rex estimates Arizona's net job gain in 2010 to be about 12,000 over the past year.

He projects it will take at least another year for a strong recovery.

"I don't want it to sound like everything is wonderful, because it isn't at all, especially from the perspective of the unemployed individual. It's still a pretty bad job market, but it's not the recession any longer," Rex said. "We are not losing jobs. We are gaining some. It's just not at the pace most people would like to see. . . .

"If you have been unemployed for quite awhile, that's not going to make you very happy to hear somebody say, 'Well, you are going to have to wait another year to get better conditions.' "

Holmes said that although economists don't anticipate any forces that will cause the state to begin losing jobs again, one concern is that some indicators have shown the national economic recovery to be in a lull.

Another concern is that controversy over the legality of thousands of foreclosures could slow down housing sales and a recovery.

"I think the biggest danger for us right now is if the nation has a stumble because of things happening in the mortgage market. That is going to affect us," Holmes said.

Foreclosure problems could further tighten the financial markets, she said.

The weak housing market continues to hammer construction employment. Construction jobs dropped in September to 116,100, about half of the jobs of three years earlier.

Temporary jobs up

Overall, however, Arizona added about 16,000 jobs from August to September.

Most of those were typical seasonal jobs associated with the start of school. The private sector had a net gain of 700 jobs over the month in September after losing jobs in the three prior Septembers.

Five sectors gained jobs from September 2009 to September 2010: professional and business services (13,800 net new jobs); trade, transportation and utilities (10,100); private education and health services (8,800); leisure and hospitality (1,500) and natural resources (1,200).

The professional- and business-service sector has been doing exceptionally well, largely because it includes temporary positions. About 7,600 jobs, mostly temp positions, have been added since September 2009.

Andrew Ernst, regional vice president with Robert Half International, said his company is seeing not only an increase in temporary workers that is typical after a recession but hundreds of direct hires. He said hires especially have picked up over the past three months.

"In talking to our clients, they are feeling more confident," he said. "They have got money in the bank. Revenues are increasing. And now, they are willing to spend some money on hiring new talent."

Chris Robinson, account manager for Ajilon Professional Staffing in Phoenix, said that his company also has seen an uptick in temp hires and that they are about double the level of a year ago.

Robinson said, however, that he sees clients still reluctant to hire permanently. "There are companies out there today that have money," he said, "but they are not ready to staff up again because maybe they have seen some growth but they are not sure if it is going to be steady growth. So, what they do is bring on temporary associates.

"And once they feel comfortable that growth is back and it's going to be around awhile, they will consider bringing them on full time."

Vanessa Ferguson, 23, an office coordinator, was hired this week as a temp-to-hire employee at Ajilon Professional Staffing in Phoenix. Economists hope that small gains in jobs will translate into more consumer and business confidence, spending and hiring.